Introduction
Altus Power, Inc. (AMPS) is the undisputed leader in the commercial-scale solar industry, having recently surpassed 1 gigawatt (GW) in operating assets across the United States. This milestone cements the company's position as the top provider of clean electric power solutions for enterprises, public sector entities, and local communities.
Company Background
Founded in 2015 and headquartered in Stamford, Connecticut, Altus Power has rapidly built an expansive portfolio of solar energy facilities over the past decade. The company's mission from the outset has been to develop, own, and operate large-scale roof, ground, and carport-based photovoltaic solar energy generation and storage systems for a diverse range of customers across the United States. In its early years, Altus Power faced the challenge of establishing itself in the competitive commercial-scale solar market, differentiating itself through innovative development processes, execution certainty for customers, and a commitment to long-term relationships.
Growth and Expansion
Altus Power's growth trajectory has been impressive, overcoming initial hurdles by building a robust pipeline of opportunities and securing financing arrangements with investment-grade partners like Blackstone. A strategic partnership with CBRE has been instrumental in accessing a large customer base, further fueling the company's expansion. In 2021, Altus Power underwent a transformative merger with CBRE Acquisition Holdings, Inc., becoming a publicly traded entity listed on the New York Stock Exchange under the ticker symbol "AMPS." This milestone provided increased access to capital, enabling accelerated growth through strategic acquisitions and portfolio expansion.
Innovative Approach
At the core of Altus Power's success is its innovative approach to solar project development and operations. The company has streamlined its processes, from site identification and customer origination to construction and ongoing management, allowing it to execute with a high degree of certainty. This efficiency has been a key differentiator, empowering Altus Power to rapidly expand its footprint and offer competitive pricing to its customers.
Environmental Impact
Altus Power's portfolio of operating assets generated 874,000 megawatt hours (MWh) of clean electricity in the first nine months of 2024, equivalent to offsetting over 800,000 metric tons of carbon dioxide emissions. This impressive output underscores the company's commitment to driving the clean energy transition and enabling its customers to meet their sustainability goals.
Community Solar Program
One of the standout initiatives within Altus Power's business is its growing Community Solar program. As of September 30, 2024, the company's Community Solar projects were serving approximately 30,000 residential and small business customers across nine states, a nearly 500% increase in its customer base over the past two years. This expansion highlights the strong demand for accessible clean energy solutions, and Altus Power's ability to deliver innovative offerings that cater to the needs of local communities.
Financials
Financially, Altus Power has demonstrated robust performance, reporting revenue of $151.8 million and adjusted EBITDA of $87.8 million for the first nine months of 2024. The company's financial results show significant growth, with the most recent fiscal year (2023) generating revenue of $155.16 million, although net income was -$9.36 million. Operating cash flow (OCF) for 2023 was $79.36 million, while free cash flow (FCF) was -$77.37 million.
In the most recent quarter (Q3 2024), Altus Power reported revenue of $58.68 million, representing a 30.2% year-over-year increase. Net income for the quarter was $8.61 million, with OCF of $21.44 million and FCF of $4.29 million. The substantial revenue growth was primarily driven by a 39.3% increase in power generation, from 239.0K MWh in Q3 2023 to 333.0K MWh in Q3 2024. This increase was attributed to a 210 MW expansion in weighted average installed capacity from acquisitions and new projects placed in service. Additionally, solar renewable energy credit revenue saw a 38.3% year-over-year increase.
Altus Power generates revenue from several sources, including power sales under Power Purchase Agreements (PPAs) and Net Metering Credit Agreements (NMCAs), Solar Renewable Energy Credit (SREC) revenue, rental income, and performance-based incentives from state and utility programs.
Geographic Performance
Altus Power operates in 25 states across the United States, with its largest markets being New York (20.2% of capacity), New Jersey (18.3%), Massachusetts (14.8%), and California (11.9%). This diverse geographical presence allows the company to capitalize on various state-level incentives and market conditions.
Liquidity
The company's balance sheet remains strong, with a cash balance of $111.3 million as of September 30, 2024, providing ample liquidity to fund its growth initiatives. Altus Power's debt-to-equity ratio stands at 2.95, while its current ratio and quick ratio are both 2.15, indicating a healthy short-term liquidity position.
Altus Power has access to several credit facilities, including: - $503 million APAF Term Loan with a weighted average 3.51% fixed rate - $125.7 million APAF II Term Loan with a variable interest rate of SOFR plus 1.48% - $204 million APAF III Term Loan with a 5.62% fixed rate - $100 million APAF IV Term Loan with a 6.45% fixed rate - $100 million APAGH Term Loan with an 8.5% fixed rate - $200 million APAG Revolving Credit Facility with a variable interest rate
These credit facilities provide Altus Power with significant financial flexibility to support its ongoing growth and operations.
Future Outlook
Looking ahead, Altus Power is well-positioned to capitalize on the significant market opportunity in the commercial-scale solar sector. The company's proven track record, innovative approach, and strong customer relationships position it for continued success. Additionally, the recent passage of the Inflation Reduction Act, which includes provisions to incentivize domestic manufacturing and renewable energy adoption, is expected to further bolster the commercial solar market and Altus Power's growth prospects.
The overall commercial solar market is projected to grow at a CAGR of 20-30% over the next 3 years, driven by favorable federal and state-level policies, declining solar costs, and rising electricity prices. Altus Power aims to grow its portfolio faster than the overall market during this period.
Guidance and Projections
Altus Power has reaffirmed its 2024 guidance range of $196 million to $201 million in revenue and $111 million to $115 million in adjusted EBITDA. The company is on track to complete a majority of the 80 MW of projects under construction by the end of 2024, with the remainder to be completed in the first half of 2025. Furthermore, Altus Power has expressed confidence in achieving its previously stated 3-year guidance of 20% to 30% CAGR on megawatts.
Challenges and Risks
However, the company is not without its challenges. Altus Power must navigate complex regulatory environments, interconnection delays, and supply chain disruptions, all of which could impact its ability to execute on new projects in a timely and cost-effective manner. Additionally, the company faces competition from other leading solar developers and independent power producers, which may put pressure on pricing and margins.
Strategic Review
Despite these risks, Altus Power's management team remains focused on driving sustainable growth and maximizing shareholder value. In October 2024, the company announced a formal review of strategic alternatives to assess and determine the best path forward to unlock shareholder value and optimize access to capital.
Conclusion
In conclusion, Altus Power's impressive journey from a single operating asset to a nationwide leader in commercial-scale solar is a testament to the company's vision, operational expertise, and commitment to the clean energy transition. With its strong financial performance, diverse geographic presence, and robust liquidity position, Altus Power is well-equipped to capitalize on the growing demand for commercial solar solutions. As the company continues to expand its footprint and innovate its service offerings, it is well-positioned to capitalize on the significant growth opportunities in the commercial solar market and deliver long-term value for its shareholders.